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iTunes showdown with record companies

By Derek Sooman

On August 30, 2005, 12:44 PM

iTunes is getting ready for a showdown with at least two of the four major record companies over the price of its songs. The iTunes model of offering 99 cents to download any song may likely be replaced with a system that prices songs according to their popularity. Thus, we might see a number one single selling for $1.49, whereas older songs that might only be of interest to fans of a particular band should sell for a much cheaper price.

However, some music executives do in fact still support the iTunes model, and don’t want it changed. They see the possibility of the higher prices backfiring, with customers heading back to unauthorized file-swapping networks or even the legal networks of competitors.

Mr. Jobs' vision of simple, uniform pricing for songs and a policy of limiting Apple's music to Apple's devices are increasingly under attack.

"He'd like to continue to define the rules of the game," said Paul Vidich, a special adviser to America Online and former executive vice president of the Warner Music Group.

Mr. Vidich said the digital music market, while growing, was still a fraction of the music business, but added, "I just think the music companies are now at a point where there's too much money on the table not to insist" that Apple accept variable prices.

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